Remitly Global, Inc.

And thank you for standing by. Welcome to the second quarter 2024 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stefan Scholstein. Vice President of Investor Relations, please go ahead.

Thank you. Good afternoon, and thank you for joining us for Vermittly's second quarter 2024 earnings call. Joining me on the call today are Matt Oppenheimer, co-founder and chief executive officer of Vermittly, and Hemant Munnappali, our chief financial officer. Our results and additional management commentary are available in our earnings release and presentation slides, which can be found at ir.vermittly.com. Please note that this call will be simultaneously webcast on the Investor Relations website. Before we start, I would like to remind you that we'll be making forward-looking statements within the meaning of the federal securities laws, including but not limited to statements regarding our Middle East future financial results and management's expectations and plans. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to vary materially from those presented here. You should not place undue reliance on any forward-looking statements. Please refer to our earnings release and SEC filings for more information regarding the risk factors that may affect our results. Any forward-looking statements made on this conference call, including responses to your questions, are based on current expectations as of today and remitly assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. The following presentation contains non-GAAP financial measures for reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metric please see our earnings press release and the appendix to earnings presentation, which are available on the IR section of our website. Now I will turn the call over to Matt to begin.

Thank you, Stephan, and thank you all for joining us to discuss Remitly's long-term strategic priorities, strong second quarter results, and our increased outlook for 2024. We continue our journey to transform lives with trusted financial services that transcend borders. We are doing this by reinventing international payments, for our customers in a way that has not been done before, making the cross-border payment experience as seamless as any domestic payment transaction. At the same time, we are solving for a myriad of additional problems faced by those sending money across borders. We are excited about the array of opportunities to invest efficiently to drive high growth, increase market share, and deliver sustainable cash flow over the long term. In order to deliver on these opportunities, we remain focused on our strategic priorities as you can see on slide four. These priorities allow us to execute our near-term goals while setting us up to drive even more long-term returns in a large and growing addressable market where we only have approximately 2.5% share. We are positioned well today and expect to benefit from the ongoing rapid shift in customer preference to more digital options. Our strong second quarter results and improved outlook validate that our strategy is both the right one and delivering the outcomes we are looking for. These results also demonstrate the resilience of our customer base and the differentiated experience we are building for our customers to send money across borders seamlessly and delightfully. Now let's get into some of the details of our second quarter results on slide five. We delivered $306 million in revenue, a 31% increase year over year and ahead of our expectations. We saw robust growth in quarterly active customers and strong customer engagement. We delivered $25 million in adjusted EBITDA, benefiting from strong top-line growth and scale efficiencies across our operating expense base. Based on our performance this quarter and our expectations for continued strong execution, we are raising our 2024 revenue and adjusted EBITDA outlook. We now serve approximately 6.9 million quarterly active customers, as you can see on slide six, which is up 36% or 1.8 million from the second quarter of last year. We saw strength in both our record new customer acquisition and engagement of existing customers. The majority of our customers send regularly with predictable and durable sending patterns. This is a direct result of the quality of our product combined with the necessity of remittances for our customers and their families to support basic living needs. This predictable behavior is also elevated by specific holidays that happen throughout the year, Mother's Day, Christmas, Eid, and New Year's, just to name a few. And these sending occasions vary by corridor globally. This results in predictable seasonal patterns with Q4 being the strongest quarter seasonally and Q2 being the second strongest quarter in terms of customer activity impact. As expected, there were more sending occasions, such as Mother's Day in the second quarter of this year, as compared with the first quarter. Additionally, in some corridors, we saw some modest benefits from a stronger US dollar, which helped to drive some additional activity on our platform. With fewer key holidays, the upcoming third quarter is typically seasonally weaker from a customer activity perspective. As a result, we expect the sequential change in quarterly active customers in the third quarter to be lower than the sequential change we saw in the second quarter and then increase as we move from the third to the fourth quarter. Ultimately, improvements to our product and platform were the foundation that drove our customer growth and improving cost structure. As you can see on slide seven, we are making significant progress on delivering a customer experience that is fast and reliable, while driving efficiencies that allow us to invest even more into the customer experience, driving a flywheel of growth and efficiency. Our transactions continue to get faster with more than 90% dispersed in less than an hour, and customer support contacts continue to decline with more than 95% of transactions proceeding without a customer support contact. Improvements in both these metrics on a year-over-year and sequential basis are directly attributable to our product investments. These customers have also recognized the progress we have made across these dimensions with our Trustpilot score continuing to increase throughout the second quarter and was recently the highest among major competitors. Investments have also delivered significant reductions in customer support costs as percentage of revenue in a customer-centric way. We delivered 260 basis points of leverage and customer support in the second quarter compared with the second quarter of last year and spent less on an absolute dollar basis year over year, even though we grew active customers by 36% and onboarded a record number of new customers. We were especially pleased that our customer support contact rate in the second quarter was the lowest it has ever been even while onboarding record number of new customers during a seasonally strong quarter. Driving some of this improvement was our launch of an AI-powered virtual assistant experience to help customers solve even more problems without the need to contact a live customer support associate. We are seeing strong initial results in both customer satisfaction and decreasing customer support contact rates, as I mentioned previously. The virtual assistant is currently focusing on transfer-related customer problems. For example, if a transfer is delayed or a customer needs to amend or cancel a transfer. The virtual assistant also answers how do I type questions, leveraging generative AI and our existing health center content. If customers need help with something that the virtual assistant does not support, it seamlessly passes the complete context of the customer issue to an associate. We have found that the virtual assistant can resolve issues within two to four minutes, four times faster than when interacting with associates. Customers also love this experience. This is resulting in savings across our support organization, and we expect our savings to continue to grow as we expand coverage to more languages and enable more use cases for self-service resolution. Looking ahead, we intend to add more use cases and expect the AI-powered virtual assistant to handle a majority of support contacts in chat, a key driver of an improved customer experience and efficiency in our customer support expenses. This would enable our highly trained customer associates to focus even more on delighting our customers when they contact us. Continuing with investments and the returns we are generating, the investment in our technology platform allowed us to provide a better experience for cruise ship workers, also known as seafarers, that we launched this quarter. With an estimated 1.89 million seafarers worldwide, including a significant number from the Philippines and India, seafarers play a crucial role in the global economy, often spending months away from their families to ensure a smooth operation of international trade and travel. I personally met several seafarers in Q2, and their journeys are inspiring and remarkable. The remittances they send home are a lifeline for their families and their loved ones. Seafarers typically have faced high fees, difficult KYC processes, and inconvenient non-digital options when sending money home. During the quarter, we launched our Remitly for Seafarers product with an all-new in-app onboarding experience, specifically designed with the unique needs of seafarers in mind. We improved the way in which seafarers can find us and complete onboarding. Seafarers can simply take a photo of their ship ID and passport, upload it to our app, and start sending money home. As a result, we have seen significant increase in seafarers as new customers. Our nimble technology platform will allow us to rapidly localize and target more types of customers that are sending money across borders. Our technology investments have also driven additional progress in tailoring our product to attract additional customer types, including higher dollar senders to our platform. Our strategy includes adding relevant payment options that provide great customer experiences and an attractive value proposition, regardless of the size of the transaction. We are focused on providing these alternatives and localized payment methods because they are becoming more ubiquitous and preferred by customers, and they are typically lower cost, which allows us to drive our growth and cost efficiency flywheel. An example of this is our launch of Interact as a pay-in method in Canada for all corridors in the quarters. Interact is Canada's predominant electronic P2P money transfer solution and is a widely adopted payment method. Compared to traditional bank payments, Interact provides much faster speed at a lower cost than card payments. As we look ahead, options for our customers to fund transactions rapidly with their bank account, including faster payments in the U.S., will make our product more attractive, diversify our transaction mix, and lower our costs. We have been able to increasingly target new types of customers, such as those sending higher transaction amounts as a result of our technology platform investments. As a result, we have been able to apply a more risk-based approach to sending limits. In the past, we have had broad sending limits that were not tailored specifically to the individual customer risk profile, which added friction to customers who were looking to send larger amounts. Now, we are able to make dynamic risk decisions and reduce friction significantly for this customer base. As a result, we have seen strong customer behavior trends at higher sending amounts especially in our U.S. to India corridor, which was weighted towards higher dollar senders. Now let's turn to our marketing efforts on slide 8. On the new customer acquisition front, we benefited from long-term trust, driving word of mouth, and product improvements that reduced friction for our customers. This allows us to execute marketing investments at even stronger unit economics. We use our deep knowledge and large data sets to invest at a D average and target tax that aligns with customer lifetime value. This approach allows us to be intentional about how much we're willing to invest to acquire new customers. In addition to the trusted product and efficient marketing, we also have a competitive advantage in our ability to continually leverage large data sets to optimize price in an analytical and targeted manner. drive both near-term and long-term customer lifetime value all of this occurs on an ongoing basis and is not in response to any specific competitive pricing changes in the quarter as a result we delivered another record number of new customers in the second quarter year-over-year growth in new customer acquisition was the strongest we have seen in the past four quarters our new customers are also increasingly sending to markets outside our top three received markets of India, Mexico, and the Philippines, with the majority of newly acquired customers in the second quarter sending outside of these markets. While our mix of markets has continued to diversify, we also acquired a record number of customers in the quarter that sent to our top received markets, such as India, Mexico, and the Philippines. This diversification brings a host of benefits including less volatility and exposure to specific effects or macro events in local economies. Marketing also delivered an increasing mix of customers from unpaid channels, such as search engine optimization, as we continue to optimize across all marketing channels. We are increasingly testing the elasticity of investments across areas such as performance marketing and promotions for new customers with the goal of driving even more efficient marketing spend. Our data-driven analytics allows us to deeply understand the incremental and marginal costs of our marketing investments. We saw some initial success with this elasticity testing in the second quarter in reducing certain areas of spending with limited impact on new customer acquisition. We will continue to monitor the effectiveness of all our marketing channels and make adjustments to continually improve our unit economics. Overall, our marketing investments continue to deliver very strong returns, and our global payback remains very attractive at less than 12 months. In summary, we are excited about our progress so far this year in delivering strong growth across multiple time horizons, all while delivering significant operating leverage in the business and improving return on our investments. In a complex industry, our strong product, customer experience, and therefore trusted brand is the foundation for this growth. As we look forward, I am confident in our 2024 outlook and beyond as we execute on our vision to transform lives with trusted financial services that transcend borders. Before I turn the call over to Hemant, I'd like to make an announcement about a change to our executive leadership team. Hemant Mudapalli, our CFO for the past two years, has informed us that he would like to leave the company based on a need to spend more time with his family in India. in true professional manner, and with care for Remitly. He generously supported our search for a potential CFO replacement so that Remitly can seamlessly move forward along its strategic path. Hemant has been a key driver of our success, and I would like to thank him for his many contributions. Since Hemant joined Remitly, he has helped lead significant customer growth with the number of quarterly active users more than doubling since he joined. In his role, he not only supported this growth, but he also enabled us to achieve these milestones with better control, efficiency, and effectiveness. Most importantly, he built a strong finance team that I have confidence will continue to support Remitly's efficient growth. Hamas, I'm grateful for your leadership, partnership, and for all that you've taught me during our work together. I'm also grateful that Hamas has agreed to serve in an advisory capacity until September 30th. Replacing Hamas as CFO effective August 19th, will be Vikas Mehta. Vikas has over 25 years of global experience across software, FinTech, and e-commerce, driving hyper-growth, business transformation, and operational excellence. He has worked for some of the most renowned Fortune 500 companies and has expertise in strategy, investor relations, and financial management. He is also a Remitly customer and has a passion for our customer base. We believe that Vakasa's experience will be instrumental as we continue to drive growth and high returns for our shareholders. With that and with thanks, I'll turn the call over to Hemal.